In Australia, people buy homes to live in, but a rented and leased apartment becomes an alternative option if that’s not the case. So, what does renting and buying mean? Are there similarities and differences between these two terms?
Difference between property renting vs buying
Renting and buying are terms used for property ownership in Australia; however, for property agreements, they’re not the same thing.
Owning or buying a home means purchasing an apartment or building entirely. The perks are intangible: ownership pride, sense of stability and community relationship. In renting, a tenant periodically pays a landlord (owner of the property) some money to occupy a home or apartment.
Often, these terms operate under the same condition. This implies that the landlord will give a tenant ownership of a home over a period under renting once they have decided to lease the property. In buying, homeownership is transferred from the landlord to the new owner.
People rent a property and occupy them for a specific period. At the end of their lease, a tenant can move without any penalty. But homeowners don’t have this liberty. It’s more expensive to decide to move when you own a home.
What’s involved in residential property renting?
In Australia, the general and most popular rental agreement is the short-term contract spanning a specified period, usually 6 or 12 months. Tenancy agreements in many states don’t have any specific timeline.
Homeowners live in their property for life except they decide to sell. Rent to occupy a property can also be paid for a period of time, implying that the lease agreement can end at any time, but it requires a legal notice period. The landlord/tenant agreement on rental properties may or may not be renewed. Once the conditions of a home sale have been satisfied and documents signed, the new homeowner doesn’t have to renew the agreement later on.
It’s typical for rent to be paid at fixed intervals like every two weeks. The tenant can pay the landlord or through a property agent. If a tenant doesn’t comply with rent payment, a breach notice can be issued to them, and they get evicted.
When you rent, the landlord bears the responsibility of home security, comfort, repairs and maintenance. As a homeowner, you’re responsible for everything that goes on in the house.
The tenant may have to pay a security deposit called a “bond” at the beginning of the lease to the property owner and managers. The stipulated amount is equal to the sum payable about 4 to 6 weeks of occupying the house. This will pay for repairs if the property is damaged during the period of the lease. Should no damage occur, the tenant gets refunded upon moving out of the apartment.
Other conditions like “no pets allowed” may be included in the tenancy agreement.
Getting a property manager
For renting, you may need a professional to handle your property management. This makes your investment easy to handle. Real estate is worth so much money so you must carefully choose a manager for the role. Pick an agent that’s reliable, organised, available, experienced, and communicates effectively. You’re your own property manager as a homeowner. The entire home management is your sole responsibility.
Appointing a real estate manager
So, you now have an agent. The next thing is to enter into an agreement known as Exclusive Leasing and Managing Authority. This contract legally allows the agency to act on your behalf in marketing and leasing the property. As your representative, the duties and obligations of the manager including their fee for the role will be stated in the agreement.
Provision of your bank details to the estate agent is essential. It’s into this nominated account that rent will be paid.
Terms of a lease agreement
A Residential Tenancy Agreement is a contract that will bind the landlord and tenant. Your agent will prepare this house lease agreement following the Residential Tenancies Act. For homeownership, a Purchase Agreement is binding on the buyer and seller.
In both cases, these documents are legal, and it’s expected that you read them carefully. The form is detailed and contains various terms and conditions in the interests of the parties involved.
In renting, the terms of the lease are usually for 12 months. At the expiration of this period, both parties may agree to go into another fixed lease term. At this time, rent will be paid to cover the new period of occupancy.
Tenants can contact the property manager for issues with home fixtures and fittings. The overall cost of owning a home is more significant than that of renting.
Renting vs buying a property doesn’t need to be difficult or confusing.
If you’re looking to rent or buy a property, get in touch with us today. We specialise in the sale and rental of Illawarra properties and have a wealth of experience in this area.